Page 22 - Accounting Principles (A Business Perspective)
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Accounting principles:A business perspective

          ensure that the company's divisions and departments follow the policies and procedures of management. This last
          group of management accountants may earn the designation of Certified Internal Auditor (CIA). The Institute
          of Internal Auditors (IIA) grants the CIA certificate to accountants after they have successfully completed the IIA

          examination and met certain other requirements.
            Many accountants, including CPAs, work in  governmental and other not-for-profit accounting. They
          have   essentially   the   same   educational   background   and   training   as   accountants   in   public   accounting   and
          management accounting.
            Governmental agencies at the federal, state, and local levels employ governmental accountants. Often the duties
          of these accountants relate to tax revenues and expenditures. For example, Internal Revenue Service employees use
          their accounting backgrounds in reviewing tax returns and investigating tax fraud. Government agencies that

          regulate business activity, such as a state public service commission that regulates public utilities (e.g. telephone
          company, electric company), usually employ governmental accountants. These agencies often employ governmental
          accountants who can review and evaluate the utilities' financial statements and rate increase requests. Also, FBI
          agents trained as accountants find their accounting backgrounds useful in investigating criminals involved in illegal
          business activities, such as drugs or gambling.
            Not-for-profit organizations, such as churches, charities, fraternities, and universities, need accountants to
          record and account for funds received and disbursed. Even though these agencies do not have a profit motive, they
          should operate efficiently and use resources effectively.
            Approximately   10,000   accountants   are   employed   in   higher   education.   The   activities   of   these  academic

          accountants include teaching accounting courses, conducting scholarly and applied research and publishing the
          results, and performing service for the institution and the community. Faculty positions exist in two-year colleges,
          four-year colleges, and universities with graduate programs. A significant shortage of accounting faculty has
          developed due to the retirement beginning in the late 1990s of many faculty members. Starting salaries will
          continue to rise significantly because of the shortage. You may want to talk with some of your professors about the
          advantages and disadvantages of pursuing an accounting career in higher education.
            A section preceding each chapter, entitled "Careers in accounting", describes various accounting careers. You

          might find one that you would like to pursue.
            Financial accounting versus managerial accounting
            An accounting information system provides data to help decision makers both outside and inside the business.

          Decision makers outside the business are affected in some way by the performance of the business. Decision makers
          inside the business are responsible for the performance of the business. For this reason, accounting is divided into
          two categories: financial accounting for those outside and managerial accounting for those inside.
            Financial accounting information appears in financial statements that are intended primarily for external
          use (although management also uses them for certain internal decisions). Stockholders and creditors are two of the
          outside parties who need financial accounting information. These outside parties decide on matters pertaining to
          the entire company, such as whether to increase or decrease their investment in a company or to extend credit to a

          company. Consequently, financial accounting information relates to the company as a whole, while managerial
          accounting focuses on the parts or segments of the company.





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